Bulletin No. 2003-42 October 20, 2003

functional currency. The regulations generally provide that taxpayers should apply the existing rules to nonfunctional currency contingent payment debt instruments in the currency in which the debt instrument is denominated, and should then translate those amounts into the taxpayersÊ functional currency using the rules provided. In addition, a rule is provided to determine the currency in which the calculations should be made in the case of a multi-currency debt instrument. A public hearing is scheduled for December 3, 2003.

REG–108524–00, page 869. Proposed regulations under section 1446 of the Code provide guidance with respect to the withholding tax liability of a partnership with income that is effectively connected with its United States trade or business, all or a portion of which is allocable under section 704 to foreign partners. Rev. Procs. 89–31 and 92–66 obsoleted.

Notice 2003–69, page 851. Section 1(h) of the Code was amended by the Jobs and Growth Tax Relief Reconciliation Act of 2003 to provide that certain dividends paid to an individual shareholder from either a domestic corporation or a „qualified foreign corporation‰ are subject to tax at the reduced rates applicable to certain capital gains. The term „qualified foreign corporation‰ is defined to include certain foreign corporations that are eligible for benefits of a comprehensive income tax treaty with the United States, which the Secretary determines is satisfactory for purposes of this provision and which includes an exchange of information program. This notice provides a current list of U.S. income tax treaties that meet the requirements of section 1(h)(11)(C)(i)(II).

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Actions Relating to Court Decisions is on the page following the Introduction. Finding Lists begin on page ii.